I talk about Feynman as a Super Synthesizer on video.
Saturday, December 6, 2008
Sunday, November 30, 2008
Broadly this is mostly an insightful article attempting to address the two key problems one encounters when dealing with the issue of innovation talent. First, how do you find your innovators? And second, what do you do with them once you do? But it misses the mark in a very crucial way - which adds to the understanding of why innovation is such a difficult thing to manage.
Stories like this lump into “innovation talent” two distinctly different types of talent. One talent is the creative design talent. This is a key talent in artistic enterprises such as art, music, movies, architecture, etc.,. It is also key in some aspects of business like the design that Apple builds into its products. The other key talent is problem-solving. Problem-solving is the talent most useful for gaining competitive advantage in business. We innovate to gain competitive advantage. When we innovate, we gain competitive advantage by solving a customer problem better than the competition. We do this by creating new knowledge in solving the problem, and we protect this knowledge to the extent possible.
The authors fail to recognize the valuable talent for innovation in business is a talent for problem-solving, plain and simple. While they don’t talk specifically about problem-solvers, they do describe what great problem-solvers are capable of doing. “The best innovators have very strong cognitive abilities including excellent analytic skills…They can frame and reframe challenges from multiple vantage points…They zero in on the most important points and waste no time on peripheral issues… innovators home in on the most critical components, see connections, and discern how to bridge different parts; they work hard and efficiently to recombine these pieces…” This describes a great problem solver.
A great example of this skill is found in looking at how Nobel Prize winner Richard Feynman backed up his off-hand, but specious boast in the Princeton lounge: “It’s easy to calculate e raised to any power using the series :
Of course Feynman’s fellow PhD students knew this was nonsense, and immediately challenged him:
“Oh yeah, well, then, what’s e to the 3.3?”
“That’s easy.” Says Feynman. “It’s 27.1…”.
Did he use this complicated series formula to calculate this? No. He had that great problem solving knack for seeing connections and discerning how to bridge them.
Here are the facts, which somehow popped into his head:
e = 2.71828…(he memorize e just because he used it a lot)
e to the 2.3 ≈ 10 (mathematician need to be able to convert base e to base 10 which Feynman had eventually memorized: e2.3026 =10)
e to the (x+y) = e to the x * e to the y.
Thus, Feynman calculated e to the 3.3 is equal to e to the (1+2.3) = e to the 1 * e to the 2.3 which is 2.71828*10, or 27.1…and he adjusted by estimating the difference between 2.3 and 2.3026 as the exponent. The answer was slightly less than 27.1828. When he got that right his colleagues gave him two more:
What is e to the 3?
What is e to the 1.4?
He used one additional fact he knew as a physicist who had to calculate half lives of radioactive materials, which is that e to the .7 ≈ 2 (e to the .69315 = 2). With this knowledge and the formula e to the (x+y) = e to the x * e to the y even you could estimate e to the 3 ≈ 20 or e to the 1.4 ≈ 4. Of course Feynman was more precise because he estimated for slight differences.
The point is Feynman had that very analytic mind which was capable of coming up with ways to break a problem down and synthesize a solution using those facts. In business, this is the basic talent you need in your innovators. It’s problem-solving.
The authors then go into outer space with statements like innovators can “identify which solutions are likeliest to be embraced by the influential people in their organization…” and innovators are “ridiculously social aware of their surroundings at all times…” That hey can “walk into a conference room…and quickly discern the underlying motivation of each one. They leverage that information to craft and communicate a message that resonates with every constituent.”
Wow! This is not consistent with my experience. Nor is it consistent with Feynman’s. Perhaps the title of his last book tells it all: What Do You Care What Other People Think?
Dr Robert Sutton at Stanford wrote about the real characteristics of talented innovators in his book Weird Ideas That Work. It is pretty much exactly the opposite. Sutton says that the kind of people the company has to have to come up with these innovative ideas are your “deviants, heretics, eccentrics, crackpots, weirdoes and just plain original thinkers.”
These are usually ‘low self monitors’. They are unable to, or at least don’t try to read other people’s non-verbal communication. Aside from being creative problem solvers, they tend to avoid contact with coworkers, have notoriously high self esteem, and are guided by an inner compass that pays little attention to how other people feel.
Actually, reading the HBR article, you get the intuition that the authors aren’t so sure about this high EQ talent idea. After all, why would you need to mentor someone who was such an extraordinary innovator who could walk into a room and command the emotional environment in a convincing way. The authors later in the article talk about taking innovators with ‘high potential’ (whatever that means) and mentoring them to defend their ideas and recognize their weaknesses. In many respects, it is a fool’s errand to try to teach great problem solvers to develop a high sensitivity to other people’s individual underlying motivations. They really don’t care what other people think, and are disinclined to develop that talent. It is much more profitable to identify people with problem solving talent and marry them up to people who are savvy about interpersonal politics to work together in delivering results.
The also get right the idea that normal jobs may not be the right place for these problem-solving innovators suggesting that companies should be “careful to place innovators outside the regular structure” indicating that, for example, JP Morgan Chase “…creates new positions for rising stars if appropriate ones don’t exist.” The activity of finding great problem solvers and determining the best ways to apply their talents is what my company is all about. You cannot let this talent bubble up, because in most hierarchical companies it won’t. You have to aggressively search it out and that is our specialty. Then you need to tailor the business environment and assignments for the individual problem-solver based on his or her talents and baggage.
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 R. Feynman, Surely You’re Joking Mr. Feynman, W.W. Norton &Co., New York,1985, p. 192
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 R Sutton, Weird Ideas That Work: How to Build a Creative Company,Free Press, New York, 2002 P. 36
 Page box “Idea in Practice”
Friday, October 24, 2008
Many companies are adept at avoiding this trap. Gore is a company that does this well. I consulted for an Australian company where the new turn-around CEO established a single internal job title: ‘Colleague’. He inverted the organization chart putting the customer on top and the people who interacted with customers just below them, and all the management team (he called ‘team leaders’) underneath them. The chart underscored the role management plays in supporting the work done by the people who actually produce the goods and services for customers. He did some other clever organizational shifts as well. The results were phenomenal: – a 16-fold increase in sales; ROE reached 35% after tax, and increased market share from 4% to 16%.
In the famous example of the NUMMI plant in Freemont California just across the bay from Stanford, the old hierarchy was thrown out and replaced with three levels for the entire plant – Team Leader (a union worker), Group Leader, and Plant Management. The plant was managed by (drum roll please) HR! At NUMMI everyone actually working was ‘Team Member’ with a single pay grade.
Second, is a two step engagement process: 1) Link the sense of personal worth to the job. This is the 5 why-is-that-importants. You ask why a function is important, and then why that (the answer to the first why) is important, until you reach something like ‘because it help people’ or ‘because it makes life better’. You’re a tax collector, why is that important? … ‘Because good roads and excellent schools make the world a better place.’
2) Organize the work such that it is team work. Now you have a team that is working together ‘to make the world better’. Nothing is more fun than working on a team with a great purpose, and nothing drives the desire for excellence more strongly than working together to make the world better. It is the most powerful workplace motivator.
Thursday, October 16, 2008
Wednesday, October 8, 2008
Yesterday I attended the MENG Chicago meeting as a guest of Buckley Brinkman. Buckley and his partner Dan Wallace have just launched their new company Launchpad Partners with the mission to help company owners triple the value of their businesses in 12-18 months.
The guest presenter was Adam Hartung, author of the book Great Marketplace Disruption. He and I presented at the Business Innovation Conference here in Chicago last month, and I did not get to see his talk since our presentations were simultaneous. But Yesterday, I was fortunate enough to attend his MENG presentation. If you ever get the chance to attend a talk by Adam, don’t miss it. He is interesting, insightful, and entertaining.
Friday, September 12, 2008
The book is written by experts (in something or other) who work for an otherwise insightful organization. Now I have to admit, that I did not plow through the entire 350 pages after bending the plow blade on these two big boulders of Law 1 and Law 2 right at the start. At some point you have to say, there is too much good stuff out there to invest a lot of time in something which seems wrong-headed to start with. Speaking of good stuff, A. Lafley’s book Game Changer is terrific.
Saturday, August 23, 2008
University of Chicago
Consulting Roundtable Event
Buckley Brinkman posted a nice comment about the Thursday night meeting:
Thursday, July 10, 2008
Welcome to a Business Innovation Conference and exhibition in the heart of America।
The Business Innovation Conference is the first conference bringing academia, government, and business together to explore and learn the science of innovation, and accelerate performance through innovation. Exchange your knowledge, experience, and excitement with Innovators like yourself.
The Business Innovation Conference will bring innovators, entrepreneurs, engineers, and executives to share their methods, challenges, and lessons learned and raise the understanding of the innovation process and tools to the next level. There will be wide range of 36 sessions and 6 workshops to choose from over three days! In addition there will be keynote presentations by diverse industry leaders and a recognition dinner for innovators.
In the past, innovation has been considered an art, flash of genius, rare occurrences of brilliance, expensive and unpredictable. In the 21st century, we must master innovation so that we become continual thinkers, capable of innovating on demand for mass customization, and sustain profitable growth. This requires that we understand innovation better and standardize the process for predictable results.
Top 5 Benefits Of Attending:
1. Raise your understanding of the innovation process and tools to the next level.
2. Learn to Sustain Profitable Growth & Innovate More Efficiently.
3. Enter the Global Innovation Awards.
4. Learn to master innovation to become a continual thinker, capable of innovating on demand for mass customization.
5. Network with industry leaders.
Who Should Attend?
· Executives of leading companies
· Business Innovation Leaders
· Educational Leaders
· Process Improvement Professionals
Your Registration Includes
· Access to all conference sessions on Sept. 9 & 10 (Workshops on Monday, Sept. 8 additional)
· CD ROM of conference proceedings
· Conference meals (cont'l breakfasts, luncheons, networking receptions)
· Book "Business Innovation in the 21st Century"
Friday, June 20, 2008
Last night was a late night, we had a heck of a time getting home after the international Roundtable event at the University of Chicago's Graduate School of Business Gleacher Center. The event itself was excellent. Tristan De La Rosa gave a talk on doing business in Vietnam. He lived there in the 1990 and has returned on business since then. It is a fascinating place to do business and looks to be a future economic hotspot and a place of opportunity. But it can be tricky to understand the local customs and the local business practices. With his years of success in Vietnam, Tristan is the expert. Tristan's contact info is below if anyone is interested in doing business in Vietnam.
TRISTAN B. DE LA ROSA
Executive Coaching & Development
512 North McClurg Court #1511, Chicago, IL 60611
Wednesday, June 18, 2008
Igor Stamenkovic won the $1500 second prize for his company’s Mag Drive. This technology utilizes computer analysis of magnetic fields to determine the optimum efficiency between fixed magnets and copper coils. The model of their motor/generator configures the fixed magnets inside a spinning core. In talking to Igor after his presentation he indicated that in the case of small windmill generators the Mag Drive motor can deliver up to 50% greater efficiency.
Third prize went to Russ Felker of RevStor. Their product uses the existing computer infrastructure within a company to create a secure computing cloud that provides security, data back-up and management for its information.
Other interesting presentations included Rich Gorski who presented a greatly miniaturized electron beam devise useful in making photo masks of circuitry to be burned into silicone. William Thompson had an idea to rejuvenate capped oil Wells to tap their remaining natural gas with a device that converts the gas to liquid, which can be transported by truck.
Jim Eiden had the idea to grow switch grass along roadsides, which can be harvested to make ethanol. Matthew Norris presented technology that unscrambles and analyzes the sounds coming from medical devices such as a wireless stethoscope to produce medical information.
The event was very well organized by the MIT enterprise forum of Chicago sponsored by Bell, Boyd, and Lloyd LLP of a Chicago, RPX group, Lextech, and Northwestern University.
Tuesday, June 10, 2008
Boeing has already said that it would do things differently in the future. But if that still includes outsourcing design, then a prudent investor might start looking at taking long-term positions in Bombardier Aerospace, or Embraer, or even India’s Hindustan Aeronautics Limited (if such an investment is even possible in India).
Friday, June 6, 2008
Thursday, May 29, 2008
David and John talked first about general developments in Open innovation including what P&G has been up to. They then talked about some of the challenges they’ve seen in trying to work with large consumer products companies. Things like presenting a new invention after the ‘innovation’ budget has already been allocated – “Sorry, it’s not in our budget” or “Our new product queue is already full”. Or working where decision-making authority is not really delegated, or where the company does not really embrace risk. In the case of dealing with risk, they are faced with calls for more prototypes, more focus groups, or more analysis. John and David talked about other ways companies use to validate the market such as DRTV , or Pop-Up Retail, or an on-line launch. They also discussed the difficulty in getting companies to appreciate the product’s value – “The devil is in what you know.” When a product manager becomes deeply invested in the established product, it is sometimes difficult for him or her to see value in an alternative.
I had the opportunity to talk to John Funk after the meeting. Evergreen IP has looked at about 3,000 inventions in the past three years. Using an internal qualitative test, they narrowed the list down to 100 promising products. Then using a tool called Merwyn they determined that 25 of these products were worth pursuing. At that point Evergreen IP has about $1,000 invested in each of the 25. Of the 25, 23 signed a contract. Then, on average, they spend about $25,000 more doing further risk analysis looking into IP issues, manufacturing costs, market price points, threat of competition, etc.,. If the decision is to go no further, the inventor is released and gets to keep the market research gathered to that point. Currently Evergreen IP is pursuing 12 products. Of those one has an annual sales prospect of over $200 million in retail sales. At a 3-5% royalty on net wholesale revenues, that could be $3-5 million to be shared annually by the inventor and Evergreen IP as long as the patents last.
I also talked to John about the background of the inventors. Other research has suggested that discontinuous innovation usually comes from someone who is not an expert in the field, whereas evolutionary innovation comes from the experts. Consistent with this research, in the case of Evergreen IP, 10 of the 12 inventions come from ordinary people who don’t work in the product space and are certainly not experts in the field.
Friday, May 23, 2008
The sponsor supports the program with an investment of $70k - $100k. A problem is presented to the students and they must develop products that address the problem. The sponsor enjoys all the intellectual property coming from the work of the students. ELKAY found the program so valuable they have asked to be put in the rotation to participate again.
Motorola, who participated as an earlier sponsor, has built a lovely facility for the program nearby the campus in Chicago. The professors were quite animated about the new facility, which they moved into at the beginning of the year.
Thursday, May 22, 2008
Read more on the White Paper on Knowledge Value and Innovation.
Tuesday, May 6, 2008
Today, thanks to sites like Yahoo and Google, we are using the Internet, not just as an information warehouse, but as a way to share knowledge. As a consequence, the Internet is becoming a crucial tool whenever we have a problem to solve. The most expedient way to solve a problem is to see if someone else has already solved the same problem and adopt that solution. The Internet is a great tool to get instant knowledge to help solve problems. One of humanities great instincts is the instinct to share knowledge. Google, Yahoo, Ask.com, MSN Live Search, AltaVista, and Lycos have ‘shared’ us into the Knowledge-Age.
Saturday, May 3, 2008
On Friday evening Bonnie Dobkin had her first book signing for her new Young Adult book “Neptune's Children - No parents. No rules. No way out” at the Vernon Hills Barnes and Noble. She’d invited me to stop by so I did and got a copy of her book for my 12 year old. I gave it to him that night and by the next morning he came to me having been unable to put the book down and said “This is the best book ever!” He reads a lot, usually well above his grade level, and is pretty critical of his reading, so his enthusiasm means Bonnie’s book really must be very enjoyable. Way to go Bonnie!
Many of the ideas presented centered around changes to existing devices such as cell phones, PDA, Music players, GPS, and remote controls. But there was also an idea to meet the need to identify financial customers remotely using biometrics, an idea for a mag-lev car, and intelligent bed, a transparent refrigerator, and since we’re just coming out of Winter, an ice-melting concept, among others.
I was one of three ‘judges’ tasked with evaluating the presentations and pick the top three. It was a tough choice since quite a few of the ideas were original, clever and insightful. But we gathered as judges outside the classroom, compared our notes and picked three. Third prize went to a technology idea, where your technology components could react to your behavior. Second prize went to an idea to create a tooth brush that would act as the controller on a game and the game would have children play by brushing different parts of their teeth, you could imagine a Nintendo Wii game. But first prize went to an idea around upgrading a universal pointing device which included a phone, a presentation controller, a remote control, and PDA, but with some cool features not found in those devices today.
Praveen gave each of the judges a copy of his book “Business Innovation in the 21st Century: A comprehensive approach to institutionalize business innovation”. It’s a perfect gift for me since I wanted to read it and our local library does not have a copy.
Saturday, April 19, 2008
Once I ran a Service Division which included a customer service function. Initially, we received so many customer calls at peak volume that we’d have long hold times. Clearly, -not good service. The reasons customers called had to do with poor performance in other departments within the Service Division. Those problems I tackled first. At the same time we provided extensive training to the customer service representative to give them expertise in solving customer problems, and we empowered them to make decisions. As we resolved the service issues, the call volume dropped and our quality of customer service skyrocketed.
The business was a commodity service and customers could fairly easily switch between providers. Pricing was generally regarded as the only competitive advantage and we were very competitively priced. However, our customer service surveys were indicating a growing sense of loyalty due to our speed of answer and the friendliness and expertise in handling any problems customers had. We had a differentiator! But if our other services were flawless, the customer would not call us। The problem we faced was how do you delight customers if the only way to do it is to have them call us to resolve a problem?
We figured this out and our great customer service gradually drove loyalty, and an increase in market share.
Monday, April 14, 2008
Thursday, April 10, 2008
The issues around taking risks are something an innovator gets very familiar with very quickly. Our brains tend to become inelastic around repeated success patterns. This phenomenon manifests itself in a strong negative, almost protective, reaction to something that threatens to alter the pattern. Innovation is, of course, all about altering some existing pattern. The risk the innovator faces is the personal consequences of putting forward something that gets everyone’s hackles up. The first response to a good idea often involves a personal attack “With all due respect your idea is crazy”, or “this is just a poorly conceived, stupid idea.” Because strong synthesizers often have low EQ’s they are not adept at navigating the interpersonal landscape, including confrontation. Devil’s Advocates can kill good ideas if the person with the ideas lacks confidence in the organization. Leadership makes pushing forward such ideas more palatable. Leaders must set an example showing a willingness to take risks. It is impossible to lead people to take risks if you do not significantly participate in the risks yourself.
An officer wanting to lead his soldiers up the hill into a hail of gunfire needs to inspire his troops to move forward. If the officer is standing there if full body armor with bullets bouncing off and his troops only have their cotton uniforms, he may have a little trouble delivering that needed inspiration. It doesn’t take a great synthesizer to see that today’s CEO’s seem to be immune from personal risk. Simply the amount of the compensation a CEO takes home means that the fundamental risks most people face in losing a job do apply to the executive ‘leader’. Second, many companies have announced lay-off due to declining performance, without preceding such layoff with some significant diminution of Senior Executive compensation. The people, most in control of the company’s poor performance, suffer the least or not at all. And finally, recently we’ve seen CEO’s who’ve led their companies into disaster; get led to the door and walk away richer than if they’d led the company to success.
When Harold Geneen, the CEO of ITT, was issued stock options by the board of directors, he immediately went out and borrowed a huge amount of money to exercise those options. Options are popular because they remove the downside risk for the recipient. By exercising them immediately, he put all that risk back in, and doubly so, since he had to borrow the money to buy the shares. He understood. If the leader wants to lead a great company, then he needs to set an example as a risk taker.
If boards want their CEO’s to take leadership roles, they will need to construct pay packages that put back the risk. Huge pay should come with huge risk. Severance package for CEOs should be based solely upon the subsequent performance of the company as reflected in dividends.
 “With all due respect” really means “I am tolerating your idiocy”
Saturday, March 29, 2008
It will be interesting to watch how this ideation process pans-out. It is a popular belief in innovation circles that to get a really good idea, you need lots of ideas. This is the old Edisonian approach to innovation. There is nothing wrong with generating lots of ideas. If you’ve got to solve a problem, and you don’t have a better method, then lots of ideas is a pretty good approach. You’re likely to generate a reasonably workable idea.
I think there is at least one great benefit to this way of ideation. In any business there is a chance that a strong synthesizer is close to the problem. It’s highly probable that this synthesizer has already thought through the problem and has a good solution. In many businesses, there is no good way for this kind of person to surface an idea. This type of ideation process may allow the idea to be surfaced as a ‘modification’ of the straw man. It still may go nowhere because often the change that’s needed cuts pretty deep into what’s in place.
People are naturally cautious about big changes. Part of that is because big change usually carries a degree of risk. But it is also true that our brains form increasingly rigid ‘success’ patterns around processes that have repeatedly worked well in the past. These hard wired patterns blind us when we examine a new idea. It is why in hindsight a hard fought for solution looks obvious when the dust settles. Oddly enough, the best ideas are almost always initially rejected with statements like: “the idea is completely unworkable”; “he doesn’t know what he’s talking about”; or “we already tried something like that and it was a total failure”. People’s brains reject change to a process or product that has long been successful. The real obstacle to this Grapevine ideation process is the notion of rating-and-ranking ideas. It is a popularity contest. The best idea will likely be pretty unpopular initially. What is needed is problem-solution evaluation criteria.
Lots if important innovations did not come from some group-think (after all, each act of synthesis happens in just one brain). The literature is full of examples of important innovations that were rejected repeatedly as dumb ideas. It is just how our minds work. Thomas Watson of IBM initially rejected the computer, 3M repeatedly rejected masking tape, Xerox rejected the personal laser printer (which HP then made into a very profitable business), and HP also rejected the display monitor, etc. It was the persistence of the originator that eventually turned the idea into a delivered solution.
One area where it would be interesting to test the usefulness of the Grapevine approach, would be in the initial problem-definition stage. That is, use the tool to define the problem precisely, with the rate and rank process identifying the fundamental properties of the problem, then the solution can be evaluated in terms of how well it purports to address each of these properties.
Wednesday, March 26, 2008
Ultimately, knowledge in business only has value if it results in action.
At first this looks a bit like a ‘mom and apple pie’ kind of statement. But when I though about it, I realized that the statement is just wrong. This suggests that if a company is going to invest in knowledge, then the company ought to reasonably expect the knowledge will result in action. By implication, the company would not invest in knowledge, if that knowledge did not have an obvious potential to result in action. Hence the engineering department would pay for engineering classes, but not learning to signing for the deaf (assuming no obvious link to action.) Someone who does not understand the role knowledge plays in innovation must have made this statement.
Synthesis, the combining of existing knowledge to form new knowledge, is the primary source of innovation for most companies today. Very often the solution to a problem comes in the form of a metaphor from some distant knowledge. E.g. the ping-pong ‘burp’ gun leading to the ‘sinking’ pipeline solution (described in another blog, [Example: Synthesis and the Obvious Solution] below). We are not able to predict what knowledge will provide a pattern, which drives our brains toward a particular solution. Hence, broad knowledge, with lots of ‘waste’ is better than narrow knowledge which does not give our brains the distant metaphors we use to solve problems.
The second reason that obtaining knowledge in an alien field is valuable, is what happens to our brains as we age. The metaphor of a rubber band works well here. If you do not take care of a rubber band it loses it elasticity and, after a time, it will snap. However, if you take care of a rubber band, you can maintain its elasticity. The human brain is the same way. Our ability to see things differently, to find new patterns from our knowledge depends upon the elasticity of our brains. Neurologist, like those at UC Berkeley have shown that if we keep challenging our brain to learn new things, things that are very different from what we already know, then we can maintain our brain’s elasticity. Otherwise, it loses its elasticity and our ability to see things differently ossifies. That is, if you speak Spanish, don’t choose Portuguese to challenge your brain, it is too similar to Spanish. Instead, learn to sign for the deaf, or read Braille, or learn to sculpt or study Chinese literature. Choose something very different from anything you’ve been exposed to before.
Friday, March 21, 2008
Experimentation requires diligence, rigor, meticulous adherence to technical methods and perseverance. In a corporate environment, good experimenters are people who are diligent and rigorous, and can follow prescribed methods without variance and will keep at it. These people do not get easily sidetracked.
Synthesizers, on the other hand, are constantly looking for new problems and newer ways to solve them. They are easily sidetracked, and would be more likely to perform each experiment a bit differently in an effort to produce a quicker, cheaper, more efficient result. They are also more likely to drop the experiment if it does not produce results quickly.
Experimentation is expensive, time-consuming, and does not guarantee a solution to the problem at hand. Companies that must experiment, like chemical and drug companies, are constantly looking for ways to shave costs and delay from Experimentation. That’s where super-synthesizers add real value. They see problems from different perspectives.
Such companies should seek out such synthesizer talent and incorporate it into the Experimentation process। They will find unseen problems and solve them with great expertise. Occasionally, a failed experiment yields a serendipitous discovery. A synthesizer will see a failed experiment from a completely different perspective giving the company a double opportunity to enjoy new IP from a serendipitous discovery.
Yes, Experimentation is innovative!
Sunday, March 16, 2008
Two tenets of good MIS design are: 1) the information should be unbiased, and 2) the benefits to the firm of having the information should outweigh its costs. MIS that is designed to demonstrate the value to the firm of a department’s activity almost always violates both these tenets. When they produce MIS designed to demonstrate the impact on profit of their activities, it’s easy for support managers to rationalize that the MIS is cost effective and free of bias. But support activities such as those performed by building maintenance, the transportation pool, the janitorial services, etc.,. are done because they are deemed necessary to the operation of the business. They are already considered valuable and trying to put a profit measure around them will not alter that.
A janitor once tried to show the impact his work had on the bottom line of the firm. He undertook a study of the impact on employees when he failed to fill the men’s room toilet paper dispensers. Measuring the time delays caused by this lack of paper he determined that on average this would cost the firm 59 second per employee per day. He further then estimated the impact of filling soap dispensers, vacuuming the carpets, sweeping and mopping, emptying trash cans, etc.,. Ultimately his analysis showed that his work contributed close to $1.5 million per year to the firm’s bottom line.
Even if we assume the janitor’s information is unbiased and accurate। What is the value of this information? Is the firm going to go out and hire 20 more janitors and realize a $30 million benefit to the bottom line? Is the firm going to give the janitor a ten-fold increase in salary? Is management going to look at the janitor’s activities with a new sense of awe?
When a department mixes useful management information with MIS of this nature, it undermines the perceived value of the information. It is important for any support function to be careful to only produce information which will have a meaningful impact on decisions which affect the bottom line.
Thursday, March 13, 2008
In the Chargeback unit where I worked incoming Chargebacks were distributed into two work teams depending on type of Chargeback. Typically, a ‘documentation’ Chargeback was more complicated to work than a ‘non-doc’ Chargeback. Every day the supervisors in each of these two departments would distribute piles of charge backs files to each of the Chargeback clerks. Chargeback clerks but were measured on the number of Chargebacks they processed each day. At the end of the day, any unworked files were returned to the supervisor. Once a Chargeback was processed it was sent to the quality unit, which checked the correctness of the processing before sending it either back to the issuer or onto the merchant.
In addition, all of the accounting control was handled in the back end where I was the supervisor. And the Arbitration unit handled all of the disputes that went to the card associations for arbitration. Altogether the Chargeback department consisted of 120 people. The unit worked a normal 40-hour week, and every Saturday about 25% of the people were required to come in to do overtime work. Morale was low. The unit was in a constant state of backlog, and because of the backlog timeframes were expiring resulting in losses for the unit. When I arrived losses were running at eight million dollars per year. Three people in the unit produced volumes of MIS around these losses.
During the first three months I was there I made some changes to the way the back-end operated to give us more control, and to automate the tracking of files by affixing a bar code to each. We installed three PC workstations with bar code readers so we could track the accounting slips associated with the files. I also spent time trying to understand the Card Associations’ rules around Chargebacks and the processes we used to work them in the rest of the department.
It seemed to me that the loss in the Chargeback department was due to four things. First, training across the board was inadequate. Second the organization of the work promoted inefficiency. Third, the way the performance was measured contributed significantly to the backlog. And lastly, the Quality Unit created it’s own backlog which allowed Chargeback timeframes to expire.
The supervisory team, met daily with the manager of the department. Most of the focus was on the MIS around losses. Losses were “the BIG problem for everyone on the team”. This MIS cut losses into every imaginable category, from issuing bank, to merchant type, to Chargeback type, to amount buckets, to aging buckets. None of the MIS helped identify the causes of the loss. On several occasions I attempted to make suggestions on how we could correct the four areas, which I felt we needed to fix. The manager responded on each occasion that I was new to the group, and that I should focus on my own area and give myself some time to understand the workings of the department before I made such suggestions. At some point, one of my fellow supervisors mentioned to one of his friends in another unit that I had ideas that would fix the problems, the friend mentioned it to his boss who mentioned it to his boss until the manager of the Operations Center got wind of it.
The center manager called me and we had a chat and he asked me to put together a presentation on what I would do to fix the unit. Ultimately, I made the presentation to the SVP responsible for the credit card business in the bank. The SVP gave me the go ahead. He decided to reassign the current manager of the department, putting me temporarily in charge.
I also exacted from him, a promise that we would not lay-off anyone in the department who was performing at a ‘level one’ or ‘level two’ performance grade, and that for six months no auditors would show up to distract us. Anyone from management was welcome to come and observe or participate unannounced.
It was mid-May, just when universities were concluding their spring semester, so I went to the nearby university and a hired six science students as summer interns to help with the department's organizational needs.
I called a general meeting of everyone in the department, and announced the reorganization. I told them that at the end of the year we would have 60 people working in the Chargeback department rather than 120, but that no one who is performing at a level one or level two would be laid-off, and that I would do everything I could to ensure that each person could demonstrate a level one or level two performance. Furthermore I said, if I have to lay anyone off, I will lay myself off first. The first requirement was that everyone on the staff get trained in the credit card rules, particularly around Chargebacks. We put together a simple, but effective, self-paced training program, which required passing a 25 question, multiple choice open-book test with a score of 100%. The test could be taken as many times as needed to get a 100% score. Each time the test was taken it was different. At first, the staff argued that the requirement was unrealistic, and perhaps a passing score of 70% was more reasonable. But, as people began passing the test, the objection disappeared. Several people adopted a learning strategy of just taking the test. We did not track how often anyone took the test, since in our view, the more often someone took the test, the better trained they would be. Within three weeks the entire staff had passed the test.
At the time, there were about 75 different Chargeback reasons. We assigned individuals to specific Chargeback reasons. These Chargeback experts were held accountable for ensuring that all the Chargebacks that flowed through their inventories were properly processed. We eliminated the quality unit entirely.
Since the volume of incoming work was completely out of our control, and it would be possible for some Chargeback experts to get ahead of their work and others fall behind, we established a performance measure, which encouraged teamwork. It was a simple structure which said you got credit for all the work done on the Chargeback reasons for which you were responsible (irrespective of who actually did the work), plus you got credit if you helped someone else to manage their inventory.
Human resources initially objected to the structure because it allowed us to give credit to two people for one person's work. We managed to convince HR that while this was true, the behavior would benefit us in the long run because, not only would we have a sense of team, but we would have overlapped in expertise which would cover us when someone was sick or on vacation. People are intelligent and clever, and before long we had people switching desks to get double credit. It cost us nothing, the quality of work was very high, and morale rose dramatically. HR further objected however, that too many people might achieve an outstanding performance rating. We asked them "what would represent a outstanding performance for the department as a whole?", and suggested that eliminating the losses, eliminating the overtime, cutting most of the fees we were paying for arbitration, and doing so with half the people surely would represent an outstanding performance. And if the whole group were needed to achieve this, surely there would be many outstanding performers. To which the head of HR laughed with obvious skepticism "if you could achieve that, then it would be 'outstanding'!"
Over a weekend, the management team along with the Science students reorganized the physical workspace and colorfully decorated the area. I turned the manager's office into a lunchroom, and moved myself out to a desk on a side of the floor where I would be accessible and everyone could see me. On Monday morning the trained workforce showed up to their new responsibilities. Overtime was immediately stopped. Within three weeks the backlog was eliminated. After six weeks all losses in the pipeline were flushed through, and further losses disappeared completely. So did the volumes of MIS around losses. Over the next three months, two people retired, one was fired because he refused help for an ongoing drug addiction, and 58 people landed other jobs within the bank mostly because the training we gave them made them the most knowledgeable people in the center. Among the 58 who left, were our 5 "best" people, all of whom received promotions in their move. We could afford to let them go because other members of the team were able to step in and be effective in those jobs.
Several months later we had a discussion about what made the reorganization so successful. I thought about that and said, "We took angry, demoralized people who were being treated as children and let them behave as adults." Their environment changed from having someone hand them their work, and having someone check everything they did, to an environment where they, themselves, managed the inventory, and no one checked their work. I was asked "If you don't check their work, then how to you manage them?" I responded, "I don't think you can manage adults. You can coach, help, and support them, but the whole notion that you need to manage adults is wrong. Adults manage themselves." We put together a structure in which people could understand how what was valuable and important to the business, was in sync with their personal and social values. Our success was based on candor, credibility, and the notion that everyone is unique, but, in our ‘adultness’ we are equal. Management's one responsibility is to manage the environment, the maturity level in the workplace.
Monday, March 10, 2008
Puzzle: This figure is made up of matchsticks laid out to form these five squares. Reposition two (and only two) matches to form four equal squares each with the same size and shape as the individual original five squares. You may not overlap one match on top of the other.
Most of us would tackle this by first looking for a solution. We ask ourselves – “Where might we be able to remove a match that would eliminate a box?” Then, we’d figure out where to use that match. We might do a lot of mental trial-and-error, and with enough persistence, either solve the puzzle or go crazy. If you are interested in doing this on your own, stop reading here and come back when you’re crazy.
But a super synthesizer sees patterns in problems differently from the rest of us. Instead of looking for a solution, a supersynthesizer might look at the problem and see if there is a different perspective. Instead of saying “I’ll start by picking up two matches” the supersynthesizer may say something like this. “I have to place two matches here such that they will each be a side to a box. I cannot place these two matches were a match exists today, because I would either be overlaying a match or just putting a match back where it was. Thus, I need to find a place where I can place two matches and form a box that is not already formed.” Or the synthesizer might say “I have 16 matches,” (how many of us would have even thought to count the matches), “and I need to make four boxes. Each box has four sides, 4X4=16, therefore, no squares can share a match.” Or say “I cannot take one or two matches from the bottom box with out leaving a match just hanging out, the same is true of the top box.” (although the logic for the top box is a bit more complex). “Thus, the adding and subtracting of the two matches has to be within space occupied by the other three squares.”
No solution has been attempted up to this point in the thinking, but the problem has been substantially re-defined. This makes the solution easier to divine. In a business context, the obvious solution often isn’t apparent until someone comes along and redefines the problem.
Monday, January 28, 2008
· An Opportunity
· Relevant Knowledge
· A Synthesizing Mind
If you want a solution to a specific opportunity, identify a ‘Supersynthesizer’ and link that person up with knowledgeable experts with unlimited access.
Friday, January 25, 2008
The largest diameter pipe on the seabed was 24 inches. By increasing the diameter by 50% to 36 inches the line capacity would increase by 225%. Unfortunately, welding sections of 36 in pipe underwater was very dangerous, expensive, and it was hard to control the quality of the welds. Even small undersea currents easily nudged a section of pipe that broad. But the opportunity was great, and the company wanted the 36 inch-line installed.
Their young Chief Pipeline Engineer was an expert on structural properties of pipelines, fluid-dynamics, electrical engineering, and petroleum products. After thinking about the problem for a little while he came up with a simple solution – build the pipeline on shore, tow it into place, and sink it. The reason this obvious solution had not been considered before is that as a pipeline is filled with water and starts to submerge it is hard to keep it from sinking irregularly and snapping welds or crimping the pipe. The solution took into account the properties of the pipe, and the properties of liquids.
Once the empty and capped pipe was floated into place, the shore end was opened and a 36 inch rubber ball was inserted followed by 15 feet of water and another 36 inch ball. Behind that, 1000 feet of gasoline (which is lighter than water, but with the pipe, weighed more than seawater) was pumped in, followed by another 36 in ball. The balls kept the liquids separated. Lastly seawater was pumped in behind the gasoline. This method allowed the pipe to flex only slightly as sections sank, and put no dangerous stresses on the welds. The whole operation took just 2 days to complete.
The synthesis took place in the engineer’s brain. Existing knowledge about fluids and structural properties of pipe were combined in his brain along with the characteristics of the problem and a solution presented itself. A couple of years earlier, his son had received a ping-pong ball burp gun as a gift. The engineer had picked up the clear tube of the gun and by restricting the open end, he could see how the ball held positive air pressure behind it. This may have formed the model for the pipeline solution.
Typically, people with this capability are able to see the whole problem at once. It is having both the ‘big picture’ and all the little details in the forefront at the same time. The solution involved no experimentation. Nobody built a little pipeline in a bathtub and tested the concept. Once the other engineers in the company understood the solution they were each able to use their own knowledge to understand that it would work. For them, it became the ‘obvious’ solution.
Thursday, January 24, 2008
In it, Geneen said. “I believe that it is important not to succumb to the latest management fad.” His view of management and success was that there was no secret, magic formula. “There are just the old-fashioned virtues of hard work, honesty, and risk taking.”
Of the three virtues, he laments that the commonest failing of mankind is the unwillingness to take risks. Because laziness and dishonesty are reviled, lots of people are industrious and honest, but “on a treadmill to nowhere – because they are so intent on playing it safe.” Mr Geneen recommends taking the initiative, being decisive, exposing yourself to failure, and seizing the opportunity, rather than deferring to higher authority, making peace with mediocrity, retreating from opportunity, and clinging to the same old routine.
Any company where politics trump risk-taking, innovation can only succeed accidentally. If you are innovative, leave such a company for one where your nature as a risk-taker can thrive.
Monday, January 21, 2008
Now if the brain were to take every experience and create a new pattern for each one, then learning would not really take place, rather we would just have a memory full of experiences. But in its efficiency the brain fits new experiences, to the extent that it can, into existing patterns. These patterns are successful patterns. The more experience can fit a pattern of better the pattern is. One could generalize across behavioral patterns in the same way. If we didn't have a mechanism to evaluate behavioral patterns, then we would be unable to differentiate a successful behavior from an unsuccessful behavior. This ability helps us develop knowledge and beliefs.
The more frequent the experience the stronger the pattern। The stronger the pattern, the deeper the knowledge and belief around that knowledge. The brain becomes less willing to create a new pattern, because the existing pattern has been imprinted as successful.
This makes it easier to understand why a manager who was so full of new ideas when he or she first took a new role, now seems unwilling to even listen to ideas about change. The manager's brain has become so impatterned with a belief about the successful way the department works, that it rejects patterns which vary from that belief.
Saturday, January 19, 2008
“Yes.” Replied the man. “Quite, and completely - dead!”
Intrigued, the psychiatrist invited the man onto his couch.
“So,” Inquired the doctor. “You’re dead, you say. How long have you been dead?”
“Well,” replied the man. “I’ve been dead most of my life, so to speak since I am not really alive.”
“Let me ask you something.” Said the psychiatrist, thinking. “Do dead people breathe?”
“No, don’t be stupid. Of course dead people don’t breathe.” Replied the dead man.
“Well I have news for you.” Said the doctor triumphantly. “Clearly you’re breathing, so you cannot truly be dead!”
“Oh, No! No!” Laughed the man. “I am only pretending to breathe. It’s a habit because not breathing tends to alarm people around me.”
“Ah, I see.” The doctor scratched his chin thoughtfully. “Well do dead people’s hearts beat?”
“Come-on.” Answered the patient. “You know the answer to that, of course dead people’s hearts don’t beat.”
The psychiatrist walked over to his desk and pulled a stethoscope from a drawer, put the earpieces into his ears and listened to the man’s chest. “I hear a heart-beat.” He said, raising his eyebrows to the dead man.
“Oh that is just a sound I make, it’s a habit like breathing.” Replied the man.
The doctor retuned to his desk, put the stethoscope away and surreptitiously picked up a pin.
“So if your heart is not beating then you would have no blood-pressure, and you would not bleed?” he asked the patient.
“No!, of course not, dead people don’t bleed.” He said emphatically.
“Are you sure?” asked the doctor.
“If you got a cut, would you bleed?
“Look,” Replied the man impatiently. “Don’t be thick about this. You know perfectly well I would not!”
Instantly the doctor grabbed the man’s finger and pricked it with the pin. Blood oozed out of the hole.
“Ah ha!” Exclaimed the doctor. “You see, you do bleed, you’re alive!”
The man looked at his finger in bewilderment, and then looked at the doctor astonished.
“Well, what do you know.” He said throwing his hands up. “Dead people do bleed.”
Originally I heard this story many years ago as an undergraduate. The point is, entrenched beliefs do not easily succumb to rational argument. Innovators run into this phenomenon all the time. ‘Big Idea’ innovators often find ‘Continuous Improvement’ innovators as not seeing the big picture or not clearly understanding the problem. Equally, the ‘Continuous Improvement’ innovator will often find the ‘Big Idea’ innovator as having risky, unworkable, or incomprehensibly ideas. For the Continuous Improvement innovator, smaller alternate approaches are better.
To successfully innovate, the team needs to find a safe way to suspend the predispositions of everyone in the room. This is a key craft of a accomplished innovation facilitator.
Friday, January 18, 2008
The B-17 had been the primary bomber for the war in Europe until the B-24 came along. The key difference between the two aircraft, was that the newer B-24 had armored plates installed to protect the plane and crew from enemy fire. While the B-17 was liked by pilots, they preferred the increased safety of the armor. To fix this, the army decided to add armor to the B-17.
Whenever a damaged bomber came back from a mission it was towed into a hangar and analyzed by a crew of aeronautical engineering experts to figure out the best ways to add armor anyplace the plane took a hit. This went on for several weeks until one day an army mechanic came up and inquired what they were doing. They explained their work, and he tactfully said, “Well that sounds pretty stupid to me.”
“Why do you say that?” They enquired.
“Well you’re looking at the wrong planes. The biggest risk to planes and crews is that a hit makes the plane crash. The planes you’re studying, fly fine with those holes.”
Similarly, if you want to regain market-share, don’t ask customers who are satisfied, ask customers who leave, or people who should be customers but aren’t.
Thursday, January 17, 2008
How our brains perform synthesis is undiscovered. Ask someone how it is that they came up with a brilliant idea, and they shrug. It just happens. And like most human abilities, some humans are more gifted at it than others.
Wednesday, January 16, 2008
The way we innovate is through Discovery, where we go out looking for something new (or serendipitously find it), Experimentation, where we try different possible solutions to find the right one, and Synthesis, where we take existing knowledge and combine it in new ways to create new ideas. In terms of economy, Synthesis is generally the most economical, and Discovery is generally the least. That is why knowledge and access to knowledge is crucial to any individual, or organization. This necessary ingredient is now more accessible to everyone around the world through this medium, the Internet. That is part of the reason we see more and more countries able to focus on innovation.